Group Loans About
A group loan is a type of loan provided to a group of individuals who come together, usually with a shared purpose or common need, to borrow collectively. This lending model is commonly used in microfinance and rural banking to help people access credit who may not qualify for traditional loans. Here's a simple breakdown:
Key Features of Group Loans:
1.Joint Responsibility:-
All group members are collectively responsible for repaying the loan.
If one member defaults, the others are expected to cover the shortfall.
2.Small Loan Amounts:
1. Loans are typically small and designed to meet the group's immediate needs, such as starting a business or meeting personal expenses.
3.No Collateral Required:
Borrowers don’t need to provide individual assets as security; trust within the group acts as the guarantee.
4.Self-Help Groups (SHGs):
Often, these loans are provided to SHGs, where members save regularly and take loans based on their collective savings.
5.Flexible Repayments:
Repayment schedules are often tailored to the group’s earning patterns, such as monthly or weekly installments.